"There is just water everywhere, coming down on the houses, both sides of the reserve there, a couple of cars going down the road three feet into the water," he said.

A resident, Nicole, told radio 3AW that some houses were at threat of going under water.

"Water is flowing into the houses on either side. There are lots of people here, there are a few plumbing guys here so I’m assuming they’re on the case trying to get it sorted. Yes, a lot of water up in the sky, it’s amazing."

Part of a Perspex roof over the backyard of a house in King Arthur Drive was destroyed by a cage that had covered the water pipe and was thrown off.

Most of the houses in the street escaped unscathed, apart from some minor flooding in garages.

Ezra and Kelson were inside when their mother called them out to see the spout, which they estimated to be 20 metres high.

"She was washing the car and heard this loud bang," Kelson, 18, said. "She thought someone had crashed but then saw this huge tower of water."

Ezra, 14, said the water quickly gushed down the street and residents at the bottom of a small slope had been worried about flooding. The water was shut off after about 45 minutes.

Melbourne Water spokesman Nicolas McGay said a faulty valve in the pipeline, which ran from Silvan Dam into the Waverley area, was believed to be responsible for the spout.

He said the damaged section of the pipe had been shut down while Melbourne Water staff attempted fix the problem, however customers’ water supply in the area was not being affected.

Mr McGay said about two million litres of water - or 0.002 of Melbourne’s daily water use - was lost when the water pipe burst.

"At this stage it's believed that a faulty air-ball valve, a valve which regulates pressure in the main, caused the burst," he said.

He said there had been one report of property damage to Melbourne Water.

"We’re working with residents to determine whether there has been any other damage," he said.

Mr McGay said the section of the 50-year-old main had no history of failure, and had an expected lifespan of about 100 years.

The main supplies water from Silvan Reservoir to more than 100,000 homes and businesses in Melbourne's south-eastern suburbs.

"Crews will continue working to repair the main without affecting customer water supply. Melbourne Water will be investigating the incident," he said.

Melbourne Water’s manager of water supply, John Woodland, confirmed that it had received one report of damage to property and that it was working with other residents to determine whether there had been any other damage.

He assured Melbourne residents it was a rare event.

"It’s one of these random type events. From time to time things go wrong it's no different than your car, you maintain it, sometimes things just don't work. It's a very rare event," he said.

Mr Woodland said despite the main supplying water to around 100,000 homes in Melbourne’s south east, the incident had not affected water supply.

"There was no impact to the supply of water ... This is a fitting off the main so we were able to get in there and isolate that main and there was absolutely no impact to the supply to residents and households," he said.

Mr Woodland also denied suggestions the incident may have been caused by poor maintenance procedures.

"We have a very rigorous maintenance program in place and we regularly inspect all our assets ... It’s a rare event and from time to time things do go wrong. I must reiterate this is a complex system. It’s a large system of hundreds of kilometres of pipe, thousands of fittings," he said.